This follows a 0.4% gain in November, revised down from the prior reading of a 0.6% increase. For the fourth quarter as a whole, production moved up at a 3.8% annual rate, down from a 4.7% rate in the third quarter.

After a soft patch in 2015, manufacturing has been a bright spot for the U.S. economy.

What happened: In December, the gains were led by manufacturing and mining. Utility output sank due to warmer weather.

Manufacturing production rose 1.1%, the biggest gain in ten months as the volatile motor vehicle and part production jumped 4.7%. But ex-auto production was also strong.

Capacity utilization rose to 78.7% in December, the highest rate in almost four years. The capacity utilization rate reflects the limits to operating the nation’s factories, mines and utilities. It’s still below pre-recession levels, above 80%, that could fan production costs and prices.

Big picture: Manufacturing is in reasonably good shape but there are troubling signs. Moving forward, trade tariffs, the strong dollar and slowing investment demand may weigh on manufacturing production.

The Fed’s Beige Book reported that factory activity slowed in January, particularly in the auto and energy sectors. This was also the message from recent surveys, including the ISM factory report. Oil production is expected to slow given the drop in crude oil prices.

What are they saying? “Manufacturing strength won’t be sustained,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Market reaction: Stocks opened higher as investors hung on to optimism over a report that Washington might ease trade tariffs on Beijing. The Dow Jones Industrial Average
DJIA, +0.38%
was up over 100 points in early trading.

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